Destination (Name of city and country)

Research objectives

Title: Domestic Politics of Japanese FTA Policy: Searching for New Paradigms in the Global Economic Downturn

Research project

This paper aims to answer the following questions about the global economic crisis triggered by the American financial crisis: (1) What are the features and the causes of the socioeconomic difficulties that Japan is facing now? (2) What efforts, in terms of public administration and governance, are being made in Japan in order to overcome the crisis? (3) In the process of overcoming the crisis, is there likely to be a paradigm shift in governance, and will the new system be institutionalized?

Achievement

Referred to as an unprecedented and once-in-a-century event, the global financial and economic crisis that began in 2008 sent the world economy into a recession overnight and has had an extremely serious impact on Japan's economy and society. Japan is facing an employment crisis from the recession.

This paper argues that Japan should pursue the scenario "grow with Asia." Before the current crisis broke out, regional economies already had strong economic fundamentals, strong financial reserves, good macroeconomic policies, and political stability. The economic downturn could possibly best be overcome by advancing Asian economic Integration- establishing FTAs, promoting regional infrastructure adjustment, enlarging consumption markets by diverting focus from the poor to the middle class, and focusing less on U.S. and European markets and more on Asian markets. The key to revitalizing the Japanese economy after the global economic downturn is not only to have the safety net of a domestic economic stimulus package, but also to promote FTAs within the East Asian region-in other words, East Asian integration. Japan is advancing FTAs-focused not only on the removal of trade barriers but also on investment, movement of people, intellectual property rights, and certification standardization-mainly with East Asian developing countries. The main motive of these agreements is to access the partner nation's market, advance domestic structural reform, and, most importantly, provide economic support for East Asian countries. The idea is that Japanese support for economic growth in East Asia will bring not only economic prosperity but also political and social stability within the region, and as a result, will benefit the Japanese economy and society as well.

To achieve the expansion of Asia's domestic demand through market liberalization, it is necessary for each country to first improve its governing capacities in general and its social security systems in particular and thereby expand the size of the consuming middle class. In addition, the middle class must be expanded by enhancing education. An East Asia-wide FTA cannot be established unless big countries, particularly China and Japan, agree to open up their markets. For this, not only economic factors but also political factors have to be dealt with. Accordingly, maintaining good political relationships is very important for the formation of a region-wide FTA. Needless to say, domestic reform and positive structural adjustment are also required to establish FTAs.

There is a very important lesson to be gleaned from the current financial and economic crisis. This crisis occurred in an increasingly globalized economy and a society characterized by growing and deepening cooperation and partnership. The crisis is a clear warning of how completely inadequate the current system is in the prevention and resolution of such global challenges. We have entered a new age in which the foundations of global governance must be rebuilt into a system where a common awareness is shared not only by the developed countries but by all countries and regions of the world, including the newly industrializing and developing countries.

As Japan is graying rapidly, it is irrational to expect an expansion of the domestic economy. Therefore, grasping the new opportunity to develop Asia is key to overcoming the socioeconomic difficulties resulting from the global crisis and to stabilizing the Japanese future. Asian regional integration is a way for the Japanese economy to undertake structural reform. Japan should advance two policy options in parallel: (1) managing a domestic safety net and (2) promoting an East Asian FTA. In that sense, Japanese government Accountability - in other words, governance - is essential.